National carrier Vietnam Airlines on Tuesday listed more than 1.4 billion shares on the Ho Chi Minh City Stock Exchange, ratcheting up a market capitalisation of $2.4 billion.
The shares, under the ticker HVN, were moved from the Unlisted Public Company Market (UPCoM) where Vietnam Airlines had been listed since 2017. The shares started trading at the reference price of VND40,600 ($1.76) apiece, with the stock jumping about 0.7 per cent during morning trading.
The session will close at 3PM ICT.
“Vietnam Airlines has become the largest company to go public on the Ho Chi Minh City Stock Exchange so far this year,” Nguyen Hoang Anh, chairman of the state’s capital management committee, said in a statement.
The company’s new listing on the southern bourse is seen as the next step for the government to reduce its ownership to 51 per cent by 2020. Represented by the Ministry of Transportation, the state holds an 86 per cent stake in Vietnam Airlines.
The national carrier was privatised in late 2014 when it offloaded a minuscule 3.48 per cent interest. In 2016, Japan’s All Nippon Airways invested $108 million in exchange for an 8.8 per cent strategic stake in the firm.
Vietnam Airlines’ major local challenger is low-cost carrier Vietjet, which is also listed on the same market with a $2.75 billion market cap.
Vietjet has overtaken Vietnam Airlines to grab the largest domestic market share, at 48 per cent by the end of 2018 compared to 37 per cent by the flag carrier. Notably, Vietnam Airlines’ market share was as high as 80 per cent in 2011, before Vietjet started to expand.
Vietnam Airlines expects to attract 24.9 million passengers this year, an increase of 13.7 per cent compared to 2018. It also targets to achieve consolidated revenue of nearly VND 112 trillion, up 12.9 per cent year on year, and consolidated pre-tax profit of nearly VND 3.66 trillion, up 3.8 per cent.
These goals are set amidst stiffer competition as new rivals enter the market. Bamboo Airways, which is owned by real estate major FLC Group, kickstarted its operations in January and targets to cover most domestic routes in the next three to five years.
Vietravel, Vietnam’s biggest tourist agency, also said it was working to establish a carrier soon to meet the growing demand from air travellers.
Although Malaysia’s AirAsia Group recently cancelled plans to enter Vietnam’s crowded aviation market, the airline said it was still keen on operating a low-cost carrier in the country.